the bankruptcy boom is back
the bancruptcy boom is back
A tough 2005 law initially slashed the number of filings, but the numbers are rising again because the root causes of unpaid debt were never addressed.
Consumer bankruptcy filings continue to increase, with Chapter 7 liquidation filings rising 54% in the second quarter compared to the previous three months.
Consumer bankruptcies had plunged following the passage of a tough new bankruptcy law last year. By the second quarter, however, the pace of filings had picked up to 2,200 to 2,300 new filings per business day, more than four times the level in November 2005 after the bankruptcy law went into effect, according to Chris Lundquist, founder of Lundquist Consulting, which tracks bankruptcy trends
Individuals filed 85,449 Chapter 7 cases in the three months ended June 30 and 142,815 bankruptcy cases overall, a 39% increase from the previous quarter. (Most consumer bankruptcies are either Chapter 7s, which allow people to erase most of their unsecured debts, or Chapter 13s, which require that at least some of the debt be repaid over
Total cases chapter 7 plus 13
1. quarter 102,949
2. quarter 142,815
Currently, courts are reporting an average of 2,300 to 2,400 daily filings, Lundquist said. That's still significantly less than the record filing levels that drove passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. But it may indicate that the bankruptcy juggernaut was just stalled, not cured, by the new law.
Consumers rushing to beat the Oct. 17 implementation flooded the court system, leading to long lines outside courthouses and unprecedented numbers of filings. More than 2 million consumer cases were filed in 2005, including 619,588 in October alone.
The reduction in filings after the law took effect -- first-quarter filings were down 73% from the same period a year ago, and second-quarter cases were 69% lower -- has been good news for those lenders. One measure of the industry's pain, Fitch Ratings' credit card index for charge-offs -- debt unpaid after six months -- plunged from a peak of 7.52% in November to 3.29% in February 2006. (denke bei den nächsten erhebungen sehen wir nach und nach ne angleichung)
If charge-offs and other delinquencies start to tick up, however, we could see the pace of bankruptcy filings quickly follow.
Credit counselors are already reporting an increase in the number of debtors seeking help because of high gas prices and adjustable-rate mortgages that have reset at higher rates. Those debtors may well enter the bankruptcy pipeline in the next year or so.(fast in jedem bericht tauchen diese wunderbaren arms auf)
Same factors propelling bankruptcies
An enormous expansion of credit by the lending industry, including to customers with shaky repayment histories and questionable ability to repay. The amount of outstanding credit card debt was more than quadrupled since 1990, to $696.7 billion, according to CardWeb.com.
A large segment of the public that's financially illiterate. Only one-third of adults in a recent poll had a good understanding of basic economic and personal-finance concepts, according to a Harris Interactive study prepared for the National Council on Economic Education. (ist in anderen ländern wohl nur unwesentlich besser. das problem ist in den usa das man mit angeboten für kreditkarten und hypotheken aller art bombadiert wird.)
dank geht an jimhttp://www.bubbleinfo.com/
TJ Knowles, a local mortgage broker, has this offering in his latest newsletter:
"100% financing, Option Arm (possible negative amortization) No Ratio (income is not considered to qualify) for a Purchase or No-Cash-Out Refinance. Very low monthly payment, and the monthly payment is fixed for five years."
(lest euch das genau durch. alles drinnen was das herz begehrt. keine anzahlung, negative tilgung, niedrigste anfangsraten mit dem hammer der dann irgendwann in einigen jahren in den ruin führt. versteht sich von selbst das einkommensnachweise nicht vorgelegt werden müssen. so werden neue insolvenkandidaten geboren. trefferwahrscheinlichkeit nahe 99%)
Interest rates with no caps. Many credit cards now come with penalty rates above 30% that can be triggered by a single late payment. Overextended consumers facing those kinds of finance charges can quickly find themselves unable to keep up with payments.
A growing number of people who are uninsured, or underinsured, against medical bills. The Census Bureau counts 45 million uninsured, and a recent Commonwealth Fund study found 41% of moderate- to middle-income adults did not have health insurance for at least part of 2005, up from 28% in 2001. A Harvard University study found medical bills were a factor in half of consumer bankruptcies. (wird demnächst sicher durch die immobilien abgelöst)
nicht zu fassen! da werden sicher einige zukünftige insolvenzen dabeisein. jetzt mischt sogar die citigroup mit. dachte bisher das sich dort nur subprime wie lend, new, fed, dsl etc rumtummeln.
Consumers were demanding more loans and enjoying easier credit from banks over the past three months even as the Federal Reserve was hiking interest rates to keep inflation in check, Fed data released Monday shows. In its quarterly survey of bank loan officers, the Fed said banks were more willing to make loans to consumers as demand got "moderately stronger" in the last three months. The Fed surveyed 56 domestic banks and 17 foreign banks. Meanwhile, standards for approving commercial and industrial loans also eased, the Fed reported. About 14% of survey respondents said they loosened credit terms for business loans
nimmt das als beispiel dank erneut an jim vom http://www.bubbleinfo.com/ (klasse seite)
Citibank has taken it a step further, they are doing 30-year fixed mortgages at 6.35% for illegal aliens. No social security number needed, and no standard credit report needed. All that is required is two years tax returns, two months bank statements, three credit 'references', like a landlord rating and utility bills, and a 3% down payment. Seller can pay the closing costs on behalf of the buyer.
I was surprised to hear that there are illegal aliens that file tax returns, but I know of an agent who has closed a handful of these and he confirmed that they file returns to substantiate their residency.